Developing the "Guide for the Process of Managing Risk on Rapid Renewal Projects" (2014)

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35 A p p e n d i x C Research was conducted to ascertain what gaps exist in the current FHWA Risk Guide and associated implementation materials with respect to application in rapid renewal proj- ects. The gap analysis leading to the development of a detailed work plan (Task 1) consisted of the following: • Literature review (see Appendix A) • Review of ACTT program (see Chapter 2) • Agency surveys and interviews (see this appendix below) • Summary of industry experience (see this appendix below) • Review of existing guidelines (see Chapter 2) The gap analysis and the resulting detailed work plan for completing the project are summarized in this appendix. Surveys An important part of the research under this project (both in Task 1 and in Task 2) was to obtain relevant information from state departments of transportation (DOTs). This research into DOTs consisted of the following: 1. A recent successful survey of DOTs regarding their risk management programs—conducted by members of the research team under a separate contract (see Chapter 2). 2. Development of a rapid renewal survey to follow up on DOTs’ experience with rapid renewal projects and their risks, conducted under this project (in Task 2), and sub- sequent interviews with DOTs and with other SHRP 2 Renewal contracts (see Chapter 2 and Appendix D). Previous State-of-Practice Survey Introduction The research team on NCHRP Project 8-60, Guidebook on Risk Analysis Tools and Management Practices to Control Transportation Project Costs, consisted of members also on the SHRP 2 Project R09 research team. These researchers developed a state-of-practice survey to identify how different transportation agencies and organizations determine contin- gencies and manage risk-related costs throughout the project development process. The team received responses from 48 of the 52 state highway agencies, from four Canadian agencies, and from more than 130 individuals. Beyond receiv- ing responses to the survey questions, the team received many e-mail and web addresses with which to find additional agency information. California, Ohio, and the FHWA sent their risk and contingency planning guides. Other agencies provided web links. This information provided the team with a snapshot of current practice in setting contingencies and dealing with risk. Figure C.1 displays the results of two survey questions. They are Numbers 10 and 19: 10. Does your organization have a formal, published defini- tion for contingency that is used consistently throughout the estimating process? 19. Does your organization have a formal, published project risk management policy or procedures? As seen in Figure C.1, only one in five agencies has a formal published definition for contingency that is used consistently throughout the estimating process, and only one in 10 agen- cies has a formal, published project risk management policy or procedure. Both of these results describe the need for research into standard risk management practices and analy- sis tools. The research team was not surprised at the small number of published risk management policies and proce- dures. The literature review confirmed that the use of risk management for cost estimating and project management is an emerging trend in the highway sector. However, the research team was surprised by the low number of agencies that have a published definition for contingency. The use of Gap Analysis

36 contingency becomes linked to risk management in the esti- mating phase of project development. In the early planning stages of a project, contingencies represent the project’s uncertainties. If agencies want to be effective in managing project costs and controlling cost escalation, it is essential to recognize contingencies (uncertainties) and include them in their early cost estimates. An important first step in that rec- ognition is for agencies to develop and publish a definition of contingency; doing so provides for its transparent and consis- tent application and helps promote accuracy in cost estimates throughout project development. Agency Estimating Organizations To develop an applicable guide for risk management practices aimed at controlling transportation project costs, it is essen- tial to understand how an agency organizes itself to create cost estimates during the project development process. This research project simplified the project development process to three distinct phases: planning, programming and prelimi- nary design, and final design. In discussions with agencies, the research team found that organizations for creating esti- mates fell into three categories: a separate section that is solely responsible for estimates; planners, designers, and project managers who join together to develop estimates; and a com- bination of the first two categories. Table C.1 provides a sum- mary of the survey results. As Table C.1 shows, few agencies maintained a separate group solely for estimating. Only about one-third of them have such a separate group to support designers and manag- ers in the planning stage and programming and preliminary design stage. This proportion rose to over one-half for the final design stage. This decentralized estimating function in the early stages of planning and project development implied that the risk management function must also be decentral- ized, or at least not solely dependent on a central risk man- agement unit. For the planning phase, the Illinois DOT was the only state agency that solely used a separate estimating group. A strong majority of the state agencies—31 of the 48 that responded— left the responsibility for estimating to the planners at this stage. The remaining 16 state agencies used a combination of both methods. These planners could have been internal agency planners, consultants, or metropolitan planning orga- nizations, depending on the agency. For the programming and preliminary design phase, no respondents used a separate estimating group. Again, a large majority of the state agencies—32—relied solely on designers and project managers to develop the cost estimates. The same 16 states used a combination of both methods. For the final design phase, agencies from only two states, Mississippi and Wyoming, solely used a separate estimating section. At this stage in project development, 21 of the 48 state agencies relied solely on designers and project man- agers while the majority used both a separate group and designers and project managers. The survey asked for the names of separate estimating sec- tions. Table C.2 provides a listing of the estimating section names to provide a sense of who is supporting the planners, designers, or project managers with their estimating tasks. Published Project Risk Management Policy or Procedures 47 of 52 State Agencies Yes 9% No 91% Published Definition for Contingency 48 of 52 State Agencies Yes 19% No 81% Figure C.1. Current state of practice in contingency and risk management. Table C.1. Agency Organizations for Creating Estimates Phase of Project Development Process Type of Organization Used Separate Group of Estimators Planners, Designers, and Project Managers Combination of Both Planning 1 (2%) 31 (65%) 16 (33%) Programming and preliminary design 0 (0%) 32 (67%) 16 (33%) Final design 2 (4%) 21 (44%) 25 (52%) Note: 48 of 52 state agencies reporting.

37 Table C.3 summarizes the use of ranges by agencies to communicate estimates. The results of the survey showed that over half the states were using ranges to communicate estimates. The results also showed, as expected, a decrease in the use of ranges as projects developed. Theoretically, the communication of estimates through ranges would be most appropriate at the earliest stages of project development when the project scope is most uncertain. As the level of informa- tion increases, estimate certainty increases and point esti- mates become more reliable. The results of this survey show that range estimates are being used to communicate project cost estimates. The guide presents tools to help agencies accurately and consistently estimate appropriate ranges. Risk Management Practices Risk is inherent in every capital transportation project. Risk is defined in the dictionary as the possibility that something unpleasant or unwelcome will happen. In this study, risk is defined as an uncertain event or condition that, if it occurs, has a negative or positive effect on a project’s objectives. Risk management involves all of the steps associated with manag- ing risks: risk identification, risk assessment, risk analysis (qualitative or quantitative), risk planning, risk allocation, and risk monitoring control. State-by-State Risk Management and Contingency Application While risk is indeed inherent in every capital transportation project, the survey found that only three of the 48 state agencies had a formal, published project risk management policy or procedures. In these three states, it was clear how the risk analy- sis related to controlling cost escalation. In the other states, the manner in which the agencies set their project and program contingency implied that they recognize and incorporate risks into project estimates, just not in a formalized risk manage- ment procedure. The following paragraphs describe how different states set contingency and analyze risk in projects. California The California State Department of Transportation (Caltrans) has different definitions for contingency based on the phase of the project. The Caltrans Project Risk Management Handbook defines contingency as the amount of money or time needed above the estimate to reduce the risk (Caltrans 2007). The Caltrans Project Development Procedures Manual (PDPM) states that contingency factors for project planning cost esti- mates vary depending on the cost estimate type. Contingencies are intended to compensate for the use of limited information. The percentage goes down as the project becomes more defined and thus less unknown. As stated in the PDPM, contingencies are not intended to take the place of incomplete design work. Project alternatives and their associated cost estimates must be thoroughly compiled by diligently using all of the available data, modifying that data with good judgment, and using past cost estimating experi- ence so that the cost estimates can be used with confidence. Table C.2. Agency Estimating Sections State Separate Section Arizona Contacts and Specifications Section California Structure Estimates Connecticut Office of Contract Development/Estimating Georgia Estimating Section Illinois Bureau of Design and Environment Iowa Department of Contracts Kentucky Construction Procurement Estimating Branch Minnesota Engineering Cost Data and Estimating Unit Nebraska Highway Estimating Section New York Estimating Section North Carolina Estimating Section Ohio Office of Contracts and Estimates Oregon Estimating Unit South Dakota Project Development Unit Tennessee Conceptual Design and Estimates Program Development Construction Estimating Virginia Scheduling and Contracts Division Final Cost Estimating Section Washington Strategic Analysis and Estimating Office Wyoming Contracts and Estimates Section Table C.3. Agency Use of Ranges to Communicate Estimates Project Phase Never Use Ranges (%) Sometimes Use Ranges (%) Always Use Ranges (%) Planning 36 55 9 Programming and preliminary design 53 38 9 Final design 70 19 11 Note: 48 of 52 state agencies reporting.

38 Table C.4 shows the contingency breakdown based on type of estimate. Caltrans has developed a capital project risk management process, which is intended to result in the effective manage- ment of project risks (threats and opportunities). The objec- tive of the process is to help project sponsors and teams make informed decisions regarding project alternatives. Together the project manager, sponsor, and team members develop a plan for how to identify, assess, quantify, respond to, monitor, and control capital project risks. If a quantitative risk analysis using the capital project risk management process shows that the contingency percentage is inadequate, an exception can be made to exceed this number (Caltrans 2007). This summary of the Caltrans process was written primar- ily from the survey response. An in-depth case study of the Caltrans risk management process is provided in the NCHRP 8-60 report. florida The Florida DOT (FDOT) does not have a formalized defini- tion of contingency. However, the state does employ both pro- gram and project contingencies. FDOT has a program contingency that is applied across the board on all projects. Each district, based on its available funds, sets the contingency amount. This contingency is a general catchall but includes project changes, additional projects added to the program, cost increases, and supplemental agreements (change orders). There is also a project contingency (known as project unknowns) that is used to cover scope additions/refinements and bid unit price escalations. Table C.5 provides FDOT’s general guide for deter- mining the project unknown factor in each estimate. Maryland The Maryland DOT does not have a formal definition of con- tingency but does have a guide that is used as estimates are developed with the project phases. The agency sets the guid- ance, but the engineers/project managers have discretion based on the level of engineering done for each phase. The survey response stated that the estimator’s discretion is based on a general risk analysis of how confident the DOT is that the cost estimate includes the entire project scope. The gen- eral percentages of contingency can be seen in the Table C.6. Missouri The project manager and design team evaluate risks and include the consideration of risk in the estimate. The survey response stated that this is not done through a formal risk analysis such as a Monte Carlo simulation but indicated that the input collected from varied sources is similar to what a risk assessment workshop would yield. Montana The Montana DOT has a formal definition for both contin- gency and risk. Contingency means an event that may occur but is not likely or intended. It is a possibility, condition of chance, for which there must be a plan of action (or additional money). Risk is a possibility of suffering harm or loss. The Montana DOT considers contingency and risk in terms of quantifiable and nonquantifiable outcomes. Contingency is an amount added to the project cost to account for the effects of incorrect quantities or unit costs, the possibility of unknown conditions or events, unforeseen project requirements, and other project risk. The agency did not provide a standard set of contingency percentages to cover the identified risk. nevada The Nevada DOT did not provide a formal definition for contingency or risk management. However, the agency has a published procedure that documents a sliding scale for con- tingency at three levels. Table C.7 lists these percentages. During the course of a project’s development, the division establishes a level of confidence for the project data called a Table C.4. Caltrans Sliding-Scale Contingency Estimate Type Contingency (%) Planning estimates 25 General plan estimates 20 Marginal estimate/final PS&E 5 Note: PS&E = plans, specifications, and estimates. Table C.5. Florida Sliding-Scale Contingency Project Phase Project Unknown Factor (%) Initial cost estimate 25 Design scope of work 20 Design Phase I (30%) 15 Design Phase II (60%) 10 Design Phase III (90%) 5 Design Phase IV (100%) 0 Table C.6. Maryland Sliding-Scale Contingency Project Phase Contingency (%) Planning 35–40 Programming and preliminary design 25–35 Final design 0–25

39 design level. These levels indicate to design managers, in very general terms, how much confidence they can have in project information currently available to them. The design team must keep the accuracy of the schedule and estimate compat- ible with the design level of the project. During preliminary design, the confidence level is at Design Level 1. The project schedule should be based on the work breakdown structure template for the appropriate project type. The schedule should be maintained using his- torical data from previous projects of similar nature, conver- sations with major project contributors, and the judgment of experienced project management professionals. A project coordinator should be able to predict the quality assurance (QA) review submittal date to within 3 to 6 months. At this level the design team should maintain the estimate using rough estimating techniques, the best information readily available, and 15% for contract contingencies. The design team should always develop its own estimates and not rely on previous attempts. During the intermediate design, the confidence level is upgraded to Design Level 2. The schedule should be corre- lated with the final scope to include all remaining tasks and be maintained using man-hour estimates, detailed conver- sations with major project contributors and the judgment of experienced project management professionals. A project coordinator should be able to predict the QA review sub- mittal date to within 1 to 3 months. At this level the estimate should reflect costs for all work being contemplated, and the design team should have rough calculations to back them up. There should be few, if any, lump sum “guesstimates” at this level. All items of work should be identified, the associ- ated units of work should be incorporated into the engi- neer’s estimate, and the contract contingencies should be set to 10%. During final design, the confidence level is changed to Design Level 3. The schedule should be based on the actual man hours needed to complete the remaining work and guar- anteed delivery dates from major project contributors. A project coordinator should be able to predict the QA review submittal date to within 1 to 3 weeks. At this level, the esti- mate should be based on actual units of work, the associated quantities should reflect checked calculations, and contract contingencies should be set to 3%. ohio The survey respondents from the Ohio DOT believe that rea- sonable contingencies should be built into the total project budget estimate. Although contingencies are not included for the final engineer’s estimate, a contingency based on different levels of design completion are included in the project’s total cost estimate. For example, at the beginning of the detail design, a design development contingency around 30% may be appropriate. As the actual design approaches 100%, the design development contingency should approach 0%. These contingencies may be developed based on previous historical data for projects of similar type and size. The Ohio DOT also e-mailed the research team a copy of its Excel-based procedure for construction budget estimat- ing. It has multiple areas that address risk and contingency, including design contingency, constructible risk/contingency, and inflation contingency. A process for determining each of these three contingency values is described in the procedure. Figure C.2 shows a sliding-scale contingency for design from the procedure. utah The Utah DOT develops contingencies on a case-by-case basis. The agency provides some initial suggested values but allows the designers/developers to use independent judgment to finalize the correct contingency. The initial suggested val- ues were not specified by the survey respondents. However, the respondents did state that a 10% change order contin- gency is added on all projects at advertisement. virginia Standard practice is to use 10% for contingency on the con- struction phase. However, project managers do have the flex- ibility to ask for an increased contingency if unique aspects of the project have a higher associated risk. Means and methods for setting contingency would be unique to the project and based on a risk profile that highlights probability and impact. Washington The Washington State DOT (WSDOT) defines contingency as a markup applied to account for substantial uncertainties in quantities, unit costs, and minor risk events related to quanti- ties, work elements, or other project requirements. WSDOT uses a combination of a standard predetermined contingency and a risk-based analysis. Table C.8 provides the standard pre- determined contingencies from the survey response. For all projects over $25 million, a formal risk analysis is performed and a range estimate and risk register of identified risk events are produced. From this risk profile, the higher end of the range, usually the 90th percentile, is selected. A miscellaneous item allowance percentage is also applied to the design depending on the development Table C.7. Nevada Sliding-Scale Contingency Project Phase: Level of Design Confidence Contingency (%) Preliminary design: Design Level 1 15 Intermediate design: Design Level 2 10 Final design: Design Level 3 3

40 Table C.8. Washington State Sliding-Scale Contingency Project Phase Miscellaneous (%) Planning 30–50 Programming and preliminary design 20–30 Detailed design 10–20 level of the project. The general percentages can be seen in Table C.8. WSDOT has developed a cost risk assessment (CRA) pro- cess. CRA describes a broad program of risk-based assess- ments being conducted within WSDOT. CRA also describes a workshop process similar to but less intense than WSDOT’s Cost Estimate Validation Process (CEVP). Risk management is an integral part of the WSDOT project management pro- cess. A key difference between conventional estimating and CEVP/CRA is the representation of project cost and schedule as a distribution (range) rather than as a point estimate. A major aspect of the CEVP/CRA method is to parse a conven- tional project estimate into those components representing base and those representing risk. The risk elements, treated as variables, are then described in terms of their possible conse- quences and probability of occurrence. Conclusions The state-of-practice survey provided valuable information for the research team. It clearly demonstrated the need for guidance on risk management and estimation of contingen- cies. It highlighted common tools currently being used by agencies. When mapped against the literature review, the sur- vey also revealed tools for risk analysis and risk management that are absent from the transportation sector. Finally, the survey pointed to the best agencies to interview in the next phase of this research. Rapid Renewal Survey A rapid renewal survey, which followed up on the state-of- the-art survey, was conducted with state DOTs to focus on rapid renewal risks. A draft of the survey questionnaire was developed during Task 1. After further research, the survey was revised and streamlined under Task 2. The final version of the rapid renewal survey is presented in Appendix D. Summary of Industry Experience As previously noted, several of the research team members have extensive experience in managing risks for rapid renewal projects. Some of this experience is summarized in Table C.9. Figure C.2. Ohio DOT design completion contingency guidelines for cost estimating of major projects. Stage of Design Co nt in ge n cy

41 Table C.9. Rapid Renewal Elements from Previously Conducted Risk Assessments by Golder Associates Inc. Owner Project Existing Facility? Rapid Renewal Elements Notes Colorado DOT I-70 Mountain Corridor Yes • Opportunity to use alternative delivery method (e.g., design–build; CM/GC). • Opportunity to use separate (early) procurement contracts for owner- supplied materials or other major specialty items. Overall, not a rapid renewal project (conventional delivery method anticipated; funding constrained), but there may be opportunities to incor- porate rapid renewal elements. Florida DOT I-595 Corridor Improvements (Fort Lauderdale) Yes • Fund and deliver using PPP (DBFOM) to complete improve- ments up to 10 years sooner than if delivered conventionally. • Replace aging facility with minimal disruption to traffic during construction. www.i-595.com/faq .aspx Florida DOT US-92 near DeLand Yes • Minimize disruption during con- struction (reduce lane closures, reduce intersection closures) by using precast, posttensioned con- crete panels at critical intersections and high early-strength concrete to shorten curing times for the rest of the roadway. New approach for FDOT. Florida DOT First Coast Outer Beltway No • Fund and deliver using PPP (DBFOM) to complete improve- ments years sooner than if delivered conventionally. Iowa DOT Council Bluffs Inter- state System Improvements Project Yes • Early utility relocations. Overall, not a rapid renewal project (design–bid–build, funding constrained). Iowa and Illinois DOTs Illinois–Iowa Corri- dor Project (I-74, including Missis- sippi River crossing) Yes • Early utility relocations. Overall, not a rapid renewal project (design–bid–build, funding constrained). Kane County, Illinois Stearns Road/Fox River Bridge Mostly no (improving existing and extending into new alignment; the bridge is a new crossing over the Fox River) • Advance steel-fabrication contract for bridge steel. Otherwise, not a rapid renewal project. Nevada DOT NEON Yes (I-15) • Considering alternative funding/ delivery (PPP). Risk assessment not yet done on this project. Pennsylvania DOT/ Port Authority of Allegheny County Pennsylvania High- Speed Maglev No • Early design and procurement of guideway steel beams. • Design–build delivery system for civil construction. • Early right-of-way acquisition for early utility relocations. Overall, not a rapid renewal project. Not sure this project is moving forward (no news on website dated later than 2005). Port Authority of New York and New Jersey PATH (World Trade Center Site) Yes (replacing existing facility destroyed in 9/11 attacks) • Alternative project delivery method (CM/GC). Utah DOT I-15 NOW Yes • Design–build delivery. • Early right-of-way acquisition. • Early utility relocation. (continued on next page)

42 Utah DOT I-15 South Yes • Design–build delivery. • Early utility relocation. Utah DOT Mountain View Corridor No • Design–build delivery. • Early right-of-way acquisition for early utility relocation. Washington State DOT Everett High- Occupancy Vehicle (HOV) Project Yes • Design–build delivery system to speed delivery of urban project. Completed. Washington State DOT SR-99/Alaskan Way Viaduct Projects Yes • Opportunity to use alternative delivery method for one or more projects. • Early right-of-way acquisition. • Early utility relocations. Overall, not a rapid renewal project (conventional delivery method anticipated), but there may be opportunities to incorporate rapid- renewal elements. Washington State DOT SR-167 High- Occupancy Toll (HOT) Lanes Yes • Design–build delivery to quickly implement civil and systems construction of demonstration HOT lanes. Completed. Washington State DOT I-405 Corridor Yes • Design–build delivery. Various phases of design and construction. Washington State DOT SR-519 Yes • Design–build delivery. Washington State DOT SR-509 Yes • Design–build delivery being consid- ered, but project is unfunded. Washington State DOT Various projects (e.g., SR-304 Bremerton tun- nel; SR-522 Sno- homish River Bridge) Yes • Early right-of-way acquisition and/or early utility relocations. Generally not rapid renewal projects, but they employ one or more rapid renewal elements. Note: PPP = public–private partnership; DBFOM = design–build–finance–operate–maintain; CM/GC = construction manager/general contractor. Table C.9. Rapid Renewal Elements from Previously Conducted Risk Assessments by Golder Associates Inc. (continued) Owner Project Existing Facility? Rapid Renewal Elements Notes Task 1 Report After completion of Task 1, to develop a detailed work plan for the entire project, the project team documented its work in a report. In addition to reporting the results of the gap analysis, the Task 1 Project Report documented the recommended revisions and updates to FHWA’s Guide to Risk Assessment and Allocation for Highway Construction Management (Risk Guide), which focus on rapid renewal projects. These recommenda- tions also drew from recently conducted FHWA risk work- shops. Tables C.10 and C.11 summarize these suggested revisions to the Risk Guide and accompanying materials.

43 (continued on next page) Table C.10. Suggested Revisions or Updates to FHWA’s Guide to Risk Assessment and Allocation for Highway Construction Management (Risk Guide) Location Suggested Revision or Update Reason Reference New Chapter 2 Add a new chapter on developing a project “baseline” for risk assessment. A project baseline consists of (1) identifying and documenting key project assump- tions, scope, delivery strategy, and baseline costs and (2) developing a sequence of major activities (flowchart) and baseline schedule. An approximately five-page chapter would be required to describe this content. This chapter would be consistent in style and detail with the existing chapters in the Risk Guide. This would be the new Chapter 2. Establishing a project baseline (i.e., the project without risk) is an impor- tant first step in the risk assessment process, because risks must be identified and measured against some baseline. While the current version of the Risk Guide addresses identification, assessment, man- agement, monitoring, and tracking of risks, it does not address the concept of a baseline or how to develop a baseline. FHWA workshop train- ing materials (MS PowerPoint slides with notes). Included as an appendix. New Chapter 9 Add a new chapter on implementing the guidance pre- sented in previous chapters of the Risk Guide. This chapter would present step-by-step instructions for implementing the Risk Guide to conduct identifica- tion, assessment/prioritization, and management of cost and schedule risks for many projects (i.e., how to implement the guidance in the new Chapter 2 and renumbered Chapters 3, 4, and 6). This chapter would summarize (and reference) the more-detailed FHWA workshop training materials and MS Excel FHWA risk management spreadsheet template and forms (in appendices), which were designed as tools to help project managers implement the Risk Guide. A discussion would be added regarding how to set up a program within a DOT to conduct such risk assessment/management. This 10–15-page chapter would be the new Chapter 9. The existing Risk Guide presents a philosophy and set of concepts but doesn’t provide specific infor- mation or detail required to actu- ally implement those concepts and conduct risk assessments on real projects. FHWA workshop train- ing materials (MS PowerPoint slides with notes; risk “forms” in MS Word) and FHWA risk man- agement spread- sheet template (in MS Excel). Included as appendices. New Appendix E Include the FHWA workshop training materials (including the MS PowerPoint slides printed with Notes pages, as well as forms and other materials) as the new Appendix E to the Risk Guide. The FHWA workshop materials were designed to serve as (1) a more detailed set of information on the concepts presented in the Risk Guidelines and (2) a set of instruc- tions on how to implement ele- ments of those concepts for project risk assessment/management. FHWA workshop train- ing materials (MS PowerPoint slides with notes; risk “forms” in MS Word). New Appendix F (electronic) Include the FHWA risk management spreadsheet template as an electronic attachment (Attachment A or Appendix F). The FHWA risk-management spreadsheet template (in elec- tronic form) can be used directly by project teams to help conduct a risk identification, assessment/ prioritization, and management exercise for many projects. FHWA risk manage- ment spreadsheet template (in MS Excel). New Appendix G Add an appendix discussing application specifically to rapid renewal projects. This would include the following: 1. Expansion of performance objectives regarding baseline and risks; 2. Inventory of rapid renewal methods; 3. Changes in baseline model for specific rapid renewal methods; 4. Checklist of risks and their potential mitigations for each rapid renewal method; 5. Modification of risk “forms” (in MS Word) and risk management template (in MS Excel) for additional performance objectives and baseline models to cover rapid renewal projects; 6. Example; and 7. References/bibliography. Risk assessment/management methods/guidance are generally the same for rapid renewal projects as for other projects. However, there are some unique aspects associ- ated with rapid renewal projects, so the FHWA forms and template cannot always be used directly. These unique aspects need to be identified and the methods/tools appropriately modified to deal with them. This will allow project teams to conduct a risk identification, assessment/prioritization, and management exercise for rapid renewal projects. SHRP 2 R09 guide and implementation materials.

44 Table C.10. Suggested Revisions or Updates to FHWA’s Guide to Risk Assessment and Allocation for Highway Construction Management (Risk Guide) Location Suggested Revision or Update Reason Reference Existing Chapters 1–8 (i.e., Chapter 1, and renumbered Chapters 3–8 and 10) Modify/update the existing Chapters 1–8 as needed based on work done for the FHWA workshop/short- course development, referencing new Appendix G for unique aspects regarding rapid renewal. These chapters would be Chapter 1 and the renumbered Chapters 3–8 and 10. (Note: This is a generalized comment that will require a complete pass through the guidelines to ensure complete consistency with the workshop training materials. Not all of these changes, many of which are editorial in nature, are listed in this table. However, some of the more signif- icant suggested modifications and revisions are called out in individual items below.) Make the existing chapters consistent with revisions and modifications that resulted from development and delivery of the FHWA workshops. However, those methods/guidance are not applicable to all projects (e.g., some rapid renewal projects). Refer to new Appendix G for these special cases. FHWA workshop train- ing materials (MS PowerPoint slides with notes). Included as appendix. Appendices A–D Modify/update the existing Appendices A–D as needed based on work done for the FHWA workshop/short course development. (Note: This is a generalized comment that will require a complete pass through the appendices to ensure complete consistency with the workshop training materials.) Make the existing chapters consis- tent with revisions and modifica- tions that resulted from development and delivery of the FHWA workshops. FHWA workshop train- ing materials (MS PowerPoint slides with notes). Included as appendix. Existing Chapters 1 (p. 9), 2 (pp. 13, 14), 3 (p. 20), 4 (p. 26), 5 (p. 30), 6 (pp. 25, 26), and 7 (p. 40) Modify/update the existing hypothetical (QDOT) case study as needed based on work done for the FHWA workshop/short course development. This hypothetical case study is referred to in most exist- ing chapters of the Risk Guide, so it would need to be updated appropriately throughout the Risk Guide. The existing description of the hypo- thetical project was enhanced for use in the FHWA workshop’s practical exercises. The hypotheti- cal description now includes more detail, as well as a baseline description and descriptions of potential cost and schedule issues in multiple disciplines. FHWA workshop train- ing materials (MS Word document with hypothetical project description and schematic). Included as appendix. Existing Chapter 1 1. Update risk management process figure (Figure 5) to include Define Baseline step. Make the same modification anywhere else this process diagram occurs. 2. Discuss project overruns, as well as the need to compare alternatives with different risk profiles, as other reasons for conducting risk assessment/ management. 3. Add discussion of why risk management is partic- ularly critical to rapid renewal projects. A definition of rapid renewal projects will be provided here, and it will be noted that most of the unique aspects of rapid renewal projects will be covered in Appendix G. 1. To ensure consistency with modi- fications/revisions mentioned previously. 2. Generally, the primary reason for conducting risk assessment/ management is to reduce the actual ultimate project cost and schedule and to get more for the money and/or prevent overruns (which often happen with sometimes disastrous consequences). 3. To ensure a focus on rapid renewal projects and describe why risk management is different on these projects. 1. FHWA workshop training materials (MS PowerPoint slides with notes). 2. FHWA workshop training materials (MS PowerPoint slides with notes). 3. Rapid renewal inventory. Existing Chapter 2 and Appendix B Add a more-comprehensive risk checklist as a resource, or replace one or more of the existing examples with a more comprehensive checklist. Refer to Appendix G for rapid renewal–related risk lists. Also, point out the following: 1. Risk registers (charters) need to be comprehen- sive, nonoverlapping lists of risks and opportunities; and 2. Risk checklists, although intended to be compre- hensive in a generic way, are often at different levels of detail and not necessarily intended to be nonoverlapping lists of risks (i.e., they are not proper risk registers or charters). The existing example lists are illus- trative, but none are particularly comprehensive because they come from one owner or type of project. A more comprehensive and generic list based on many risk assessments for multiple own- ers and project types could be useful to agencies that are new to risk assessment. FHWA workshop train- ing materials (MS Word document with a more comprehen- sive, generic risk checklist). Included as appendix. (continued) (continued on next page)

45 Table C.10. Suggested Revisions or Updates to FHWA’s Guide to Risk Assessment and Allocation for Highway Construction Management (Risk Guide) Location Suggested Revision or Update Reason Reference Existing Chapter 3 1. Modify the presentation Risk Screening (Section 3.4 and on, and related figures) to include two additional risk identification and rating/ranking methods. Also include a comparison of the pros and cons of the three presented methods for iden- tifying and rating/ranking risks. 2. Discuss subjective assessments and biases. 1. The method presented in the existing Risk Guide is vague and often misused. Alternative meth- ods are available, depending on the owner’s risk-identification and rating/ranking objectives. Two such methods were presented in detail in the FHWA workshop/ short course, and the FHWA risk management spreadsheet tem- plate has one of these methods built into it. 2. Due to the general lack of repre- sentative databases, most assessments will be subjective (i.e., based on opinion). Such subjective assessments are prone to bias, which must be recog- nized and mitigated to the extent possible. FHWA workshop train- ing materials (MS PowerPoint slides with notes) and FHWA risk manage- ment spreadsheet template. Included as appendices. Existing Chapter 4 Modify discussion of the following: 1. Sensitivity to consider impacts on target percentile of escalated cost rather than on either (but not the combination of) the mean or variance of various performance; and 2. Correlation among uncertain factors. 1. The impact of any particular fac- tor on the budget (which is typi- cally a target percentile of the total escalated cost) is typically of most interest in prioritizing risks. 2. Correlations among uncertain factors have a major impact on the results. If correlations (which are most often positive) are ignored, then the uncertainty in the outputs (and thus in the target percentile) is underestimated. FHWA workshop train- ing materials (MS PowerPoint slides with notes). Included as appendix. Existing Chapter 5 Add discussion of the following: 1. Evaluation of potential risk mitigation actions; 2. Determination/management of contingency draw- down (currently in Chapter 7.4); and 3. Recovery plans. Guidance is needed on how to eval- uate mitigation actions, how to determine appropriate contin- gency for various project mile- stones, and how to develop an appropriate recovery plan (if con- tingency is inadequate). FHWA workshop train- ing materials (MS PowerPoint slides with notes) and FHWA risk manage- ment spreadsheet template. Included as appendices. Existing Appendix A Add summary/reference to case studies developed as part of research projects for FHWA (TxDOT, FDOT, CDOT, VDOT). The methods presented in the work- shops were successfully imple- mented on projects, which have been adequately documented in separate case studies. FHWA case studies. Existing Glossary Refine and add definitions, as needed. The glossary is incomplete and needs to be consistent with modi- fications/revisions mentioned previously. FHWA workshop train- ing materials (MS PowerPoint slides with notes). Included as appendix. Existing References and Bibliography Add items as needed. Many additional references were used in the development of the FHWA workshop training materials. FHWA workshop train- ing materials (MS PowerPoint slides with notes). Included as appendix. (continued)

46 Table C.11. Suggested Revisions or Updates to Implementation Materials Location Suggested Revision or Update Reason Reference New Module 8 Add a module discussing application specifically to rapid renewal projects. This would include: 1. Expansion of performance objectives regard- ing baseline and risks; 2. Inventory of rapid renewal methods; 3. Changes in baseline model for specific rapid renewal methods; 4. Checklist of risks and their potential mitiga- tions for each rapid renewal method; 5. Modification of risk “forms” (in MS Word) and risk management template (in MS Excel) for additional performance objectives and baseline models to cover rapid renewal projects; and 6. Example. Risk assessment, management meth- ods, and guidance are generally the same for rapid renewal projects as for other projects. However, there are some unique aspects associ- ated with rapid renewal projects, so the FHWA forms and template can- not always be used directly. These unique aspects need to be identi- fied and the methods/tools appro- priately modified to deal with them. This will allow project teams to con- duct a risk identification, assess- ment/prioritization, and management exercise for rapid renewal projects. SHRP 2 R09 guide and implementation materials. Existing software training Modify training to include different forms and templates for rapid renewal projects. Different forms and templates will probably be used for rapid renewal projects. SHRP 2 R09 guide and implementation materials. All other training materials Modify/update all the existing training materials as needed based on work done for the SHRP 2 R09 development. This would probably include primarily adding reference (as appropriate) to new Module 8 in the slide notes. Most of the risk assessment/man- agement methods will be the same for traditional and for rapid renewal projects. The unique aspects of rapid renewal projects will be contained in one module. SHRP 2 R09 guide and implementation materials.